Think Cellulosic Ethanol

When Alan Greenspan opened his mouth as chairman of the Federal Reserve Board, the entire universe tuned in.

Alas, he is now former chairman. Only two members of the Senate Foreign Relations Committee showed up at the start of Mr. Greenspan's testimony earlier this month.

But what he had to say should be on America's front burner because it has to do with energy or the lack thereof. The balance between oil supplies and demand has reached such a precarious point, he said, ``that even small acts of sabotage or local insurrection have a significant impact on prices.'' Our economy is beginning to get hurt by ``the huge implicit tax of rising oil prices.''

So much for official Washington's assurances that oil supplies are more than adequate. In any case, Mr. Greenspan doesn't believe government intervention is the most sensible answer. ``Rising prices are a very effective tool in compressing demand,'' he said. That is, Americans will wean themselves from heavy reliance on petroleum because at a certain price range, they can't afford to fill their gas tanks. But it will be slow weaning, he predicted, ``like watching grass grow.''

A prosperous and secure future requires more than conservation and ethanol, which he expects to play only a limited role so long as ethanol is corn-based. The Greenspan prescription includes increased imports of liquefied natural gas, production of clean coal and nuclear power, and ... and cellulosic ethanol.

Cellulosic? That's ethanol made up of agricultural refuse, grass, wood, municipal waste and a variety of feedstock, which is less expensive and more available than just corn. The technology to develop this energy source has yet to be developed, but in the world according to Greenspan, market forces will make it happen.

The former Fed chairman is not so enamored of the elixir of markets that he has lost touch with reality. He believes that ``oil will remain an important element of our energy future.'' But he also believes that markets will reward those who get busy with conservation and alternative fuels.

We might want to tell our children that the future is not in oil-based plastics. It's in cellulosic ethanol. It's that or being enslaved to oil from distant lands.